DarkRange55
I am Skynet
- Oct 15, 2023
- 1,954
Just some ramblings…
Annual mine output has indeed crept up most years, but total above-ground stock (~210 000 t) matters more than annual flow (~3 400 t in 2024). New supply therefore adds only ≈1½ % per year—lower than world GDP or population growth.
Gold's monetary "inflation" is low and fairly predictable. That slow dilution is exactly why gold has served as a monetary benchmark.
Demand swings (jewelry, ETFs, central-bank buying) often dominate price moves. Gold can be a barometer of currency weakness, yet price changes often reflect independent demand shocks as well.
Gold gets its value, or most of it, from the same place paper money does: We accept it in exchange for our work or our goods because we expect other people to do the same for us. exactly, it's value is as a source of value. it's value isn't from industrial or jewelery uses. People who argue for the gold standard in order to have money "backed by something" seem to ignore that gold isn't all that different from paper money.
It is currently harder to mine more gold than to print more paper money.
Until we can easily extract from seawater, or mine a metallic asteroid, etc., we cannot quickly double the supply of gold.
We currently mine about 3000 tons a year and with today's technology about 50,000 more tons would be economically recoverable, or 15 to 20 years' worth.
There is a lot more gold out there – something like 20 million tons in seawater, if I remember, but it is not currently economically recoverable.
And there is a massive amount of gold in Earth's core, but that is way beyond our ability to extract.
Its value derives from its demand for exchange within a society that values it.
As with most things in life, the demand for gold is not strictly related to its rational utilitarian value. The fact that two thirds of it is used for decorative purposes shows that people want it simply because they like the way it looks. Possessing things made of gold is also seen as a way of showing that you have money. It can be reassuring to know that you were able to afford something made of gold.
And gold makes better jewelry than paper does.
Every asset is a confidence game and all representatives of the system are confidence men. Currencies, Bitcoin, equities, any type of investment. It is all a confidence game and it is all going to zero eventually. Even gold. Gold has a 5,000 year track record. Everything else you're lucky to get ~50 years on it. With the exception of real estate. Real estate will last a good amount of time. But countries are going to war, being taken over, buildings are torn down, natural disasters wipe out a building, land can be seized all these different things. It's all a confidence game in terms of its all just a narrative and nothing has inherent value.
Mostly true, but knowledge can have inherent value.
If everyone on the planet is dead and you're the only one left, your gold, your equities, your "land that you own," is of no value. Things that would be valuable to you would be food, clothing, shelter, technology, and if there's at least one woman on the planet. Very valuable. Those things are only valuable when you can trade them for something of value, a good or a service. The true value is goods, services and people and the types of relationships that you can have with people. And a lot of services really are just a relationship with a person. So those are the things that are of value. Everything else is just a narrative, it is a concept and in many cases doesn't have any physical value or physical properties. Gold has physical properties but the properties are really it's just a rock.
Gold also has some industrially useful properties.
Real estate - buildings have properties but a currency is just a magical piece of paper that they've created this ritual about. Stocks you don't even have the certificates, its digits on a screen. Most currency is just bits and bites on a screen somewhere. They're all based on narrative which is why the most important thing for any government is control of the narrative, control of the media because its all a narrative. The government itself is a narrative, the idea of a country is a narrative. The idea of any of these things that most people think of real physical entities are just narratives with no physical existence and if it is a physical existence there has been a ritual placed on it to give it an existence beyond what it actually is. Like gold for example. It's a rock. But the narrative is its gold, it has a 5,000 year track record, its a store of value. Why is it a store of value? Because believe that it is. And its a secure store of value because there's a 5,000 year track record. As opposed to currency. They're USD has a long track record. But only because people think it has value. Many other currencies, you're lucky to get 30 years on some of these currencies in Latin America before a reset or before the currency is renamed or whatever the case may be. You hear a lot about Bitcoin has inherent value and gold doesn't or vice versa or currencies are worthless like Peter Schiff says, yet he's only 5% in gold and the rest of his investments are denominated in USD, he's not in cash but he's in equities and business ownership which is denominated in this so-called fiat currency that has become very popular to write off as trash. The reality is thats what you have to use to pay for things in America. In some cases you can pay in Bitcoin. In Panama & El Salvador you can pay in Bitcoin for houses and stuff like that. It is a currency in some countries and I could see more of that happening in the future but I could also see more regulation and less ability to use it or less ability to covert it to various things. But its no different than USD, its all the same thing. Warren Buffet said he wouldn't buy all the Bitcoin in the world for $25.
If one person owned all the bitcoin, it would probably lose its value.
Thats how much he hates that particular narrative and refuses to give it legitimacy because in his mind its inherently worthless. Whereas these equities that I own have inherent worth because they're based companies and revenue and dividends. But those are just arbitrary concepts that people denote value to and therefor the price of the stock goes up. I'm not saying revenue and dividends are arbitrary in that they have no value - when you own a business you want high revenue and high dividends. But when you own a oiblic company, for that stock to go up, the company now is not about making money. It is about increasing shareholder value which is based around revenue and dividends because that is what people believe increases value but thats just narrative. Amazon was unprofitable for a decade, so was Netflix. But they were showing user traction, etc. the narrative looked good. At the end of the day, once you go public and the main value about getting rich for the owners is about increasing shareholder value. Its all about narrative. If you think about what you own, where your money is - it's in the cloud, its some digits as currency or Bitcoin or even in terms of your real estate because your documents for the title of that physical property you "own" is stored in the cloud. You might have some physical backups but the database for real estate is online. Even gold being held in Singapore is on an online database for the company where you have to provide some KYC, etc. Money is stores in the cloud, in the ether, it is a concept that other people believe in that allows you ti give them whatever that store of value is to give you goods and services. And the game only works because other people believe it.
Most people think of these things as having inherent, physical value as opposed to its all just a game. And the game is to get as much of things that people have confidence in and then use that to get the things you want whilst understanding that it is a narrative and that literally is the money game. And I garuntee you the people at the top of the pyramid understand that. In fact Donald Trump was quoted in his book Think Big that business guys are streetwise and they understand that it's just a game and the highest level of business operators aren't really stressed about it because they're playing it like its a game. And politicians approach it the same way. And those are the guys that create the narrative.
Modern economics treats value as relational: an object is worth what someone is willing to give up for it. Narrative, expectations, and social conventions are powerful because humans coordinate through them.
Money, blockchains, even equity markets only function because everyone else also accepts the ledger.
Real assets (farmland, rental apartments, power plants) and many equities yield ongoing cash flows or direct consumption services. Even if narratives wobble, a tenant still pays rent and a generator still feeds the grid. That stream of benefits gives the asset a fundamental floor independent of price history or social belief.
Prime land in central Rome has held value for two millennia despite regime change.
The value persists because people like to think that it has value. There is historical association with gold as a currency; this has created a cultural attachment to it that persists even though that association is no longer extant.
~Nothing has any inherent monetaryvalue.~ Financial cost is, at its core, is a convenient collective delusion.
WHAT IS IMPORTANT is the underlying trading and exchange of good that we use in our daily lives. -- food, transport, housing. More transactions then people are doing better. Less then unemployment. how and what you pay with (or agree to pay) is just a matter of convenience and cultural norms. Goats, land, gold, and then later currencies.
Look at economy and then money as just a convenient way to pay for something that you consume.
Currency is just a convenient way of counting. remember that value is a reflection of the real economy: land, food, goods and services. go bsck to barter economies where we traded goats, wheat, salted food/meat .. and evolved into gold and currency (before central banks)
Stay with basics if real economies ... today value of currencies are just people/banks/ traders evaluation of long term prospects of economic growth of US, China, Japan, UK, EU...
The driver is real economy -- goods and services, trade -- of currency which is just a way of counting
Gold is mostly cultural and anthropological -- look to countries and monetary economics MV=PY.
For some people and countries gold still holds some value (cultural) and hold over from gold backing currencies.
speculation and long term cultural values of exchange.
Gold/silver markets there is no underlying economic value -- except gold in teeth or silverware / jewelry which is more vanity related.
Gold and silver are not the issue anymore. A 19th century approach to banking. We are off gold (silver) standards, so now value of economy and currency, like $, Euro, Yen, Rmb.
Currencies are a while different/complex area where value reflects how countries are doing (balance of payments) and relative we size.
www.visualcapitalist.com
Annual mine output has indeed crept up most years, but total above-ground stock (~210 000 t) matters more than annual flow (~3 400 t in 2024). New supply therefore adds only ≈1½ % per year—lower than world GDP or population growth.
Gold's monetary "inflation" is low and fairly predictable. That slow dilution is exactly why gold has served as a monetary benchmark.
Demand swings (jewelry, ETFs, central-bank buying) often dominate price moves. Gold can be a barometer of currency weakness, yet price changes often reflect independent demand shocks as well.
Gold gets its value, or most of it, from the same place paper money does: We accept it in exchange for our work or our goods because we expect other people to do the same for us. exactly, it's value is as a source of value. it's value isn't from industrial or jewelery uses. People who argue for the gold standard in order to have money "backed by something" seem to ignore that gold isn't all that different from paper money.
It is currently harder to mine more gold than to print more paper money.
Until we can easily extract from seawater, or mine a metallic asteroid, etc., we cannot quickly double the supply of gold.
We currently mine about 3000 tons a year and with today's technology about 50,000 more tons would be economically recoverable, or 15 to 20 years' worth.
There is a lot more gold out there – something like 20 million tons in seawater, if I remember, but it is not currently economically recoverable.
And there is a massive amount of gold in Earth's core, but that is way beyond our ability to extract.
Its value derives from its demand for exchange within a society that values it.
As with most things in life, the demand for gold is not strictly related to its rational utilitarian value. The fact that two thirds of it is used for decorative purposes shows that people want it simply because they like the way it looks. Possessing things made of gold is also seen as a way of showing that you have money. It can be reassuring to know that you were able to afford something made of gold.
And gold makes better jewelry than paper does.
Every asset is a confidence game and all representatives of the system are confidence men. Currencies, Bitcoin, equities, any type of investment. It is all a confidence game and it is all going to zero eventually. Even gold. Gold has a 5,000 year track record. Everything else you're lucky to get ~50 years on it. With the exception of real estate. Real estate will last a good amount of time. But countries are going to war, being taken over, buildings are torn down, natural disasters wipe out a building, land can be seized all these different things. It's all a confidence game in terms of its all just a narrative and nothing has inherent value.
Mostly true, but knowledge can have inherent value.
If everyone on the planet is dead and you're the only one left, your gold, your equities, your "land that you own," is of no value. Things that would be valuable to you would be food, clothing, shelter, technology, and if there's at least one woman on the planet. Very valuable. Those things are only valuable when you can trade them for something of value, a good or a service. The true value is goods, services and people and the types of relationships that you can have with people. And a lot of services really are just a relationship with a person. So those are the things that are of value. Everything else is just a narrative, it is a concept and in many cases doesn't have any physical value or physical properties. Gold has physical properties but the properties are really it's just a rock.
Gold also has some industrially useful properties.
Real estate - buildings have properties but a currency is just a magical piece of paper that they've created this ritual about. Stocks you don't even have the certificates, its digits on a screen. Most currency is just bits and bites on a screen somewhere. They're all based on narrative which is why the most important thing for any government is control of the narrative, control of the media because its all a narrative. The government itself is a narrative, the idea of a country is a narrative. The idea of any of these things that most people think of real physical entities are just narratives with no physical existence and if it is a physical existence there has been a ritual placed on it to give it an existence beyond what it actually is. Like gold for example. It's a rock. But the narrative is its gold, it has a 5,000 year track record, its a store of value. Why is it a store of value? Because believe that it is. And its a secure store of value because there's a 5,000 year track record. As opposed to currency. They're USD has a long track record. But only because people think it has value. Many other currencies, you're lucky to get 30 years on some of these currencies in Latin America before a reset or before the currency is renamed or whatever the case may be. You hear a lot about Bitcoin has inherent value and gold doesn't or vice versa or currencies are worthless like Peter Schiff says, yet he's only 5% in gold and the rest of his investments are denominated in USD, he's not in cash but he's in equities and business ownership which is denominated in this so-called fiat currency that has become very popular to write off as trash. The reality is thats what you have to use to pay for things in America. In some cases you can pay in Bitcoin. In Panama & El Salvador you can pay in Bitcoin for houses and stuff like that. It is a currency in some countries and I could see more of that happening in the future but I could also see more regulation and less ability to use it or less ability to covert it to various things. But its no different than USD, its all the same thing. Warren Buffet said he wouldn't buy all the Bitcoin in the world for $25.
If one person owned all the bitcoin, it would probably lose its value.
Thats how much he hates that particular narrative and refuses to give it legitimacy because in his mind its inherently worthless. Whereas these equities that I own have inherent worth because they're based companies and revenue and dividends. But those are just arbitrary concepts that people denote value to and therefor the price of the stock goes up. I'm not saying revenue and dividends are arbitrary in that they have no value - when you own a business you want high revenue and high dividends. But when you own a oiblic company, for that stock to go up, the company now is not about making money. It is about increasing shareholder value which is based around revenue and dividends because that is what people believe increases value but thats just narrative. Amazon was unprofitable for a decade, so was Netflix. But they were showing user traction, etc. the narrative looked good. At the end of the day, once you go public and the main value about getting rich for the owners is about increasing shareholder value. Its all about narrative. If you think about what you own, where your money is - it's in the cloud, its some digits as currency or Bitcoin or even in terms of your real estate because your documents for the title of that physical property you "own" is stored in the cloud. You might have some physical backups but the database for real estate is online. Even gold being held in Singapore is on an online database for the company where you have to provide some KYC, etc. Money is stores in the cloud, in the ether, it is a concept that other people believe in that allows you ti give them whatever that store of value is to give you goods and services. And the game only works because other people believe it.
Most people think of these things as having inherent, physical value as opposed to its all just a game. And the game is to get as much of things that people have confidence in and then use that to get the things you want whilst understanding that it is a narrative and that literally is the money game. And I garuntee you the people at the top of the pyramid understand that. In fact Donald Trump was quoted in his book Think Big that business guys are streetwise and they understand that it's just a game and the highest level of business operators aren't really stressed about it because they're playing it like its a game. And politicians approach it the same way. And those are the guys that create the narrative.
Modern economics treats value as relational: an object is worth what someone is willing to give up for it. Narrative, expectations, and social conventions are powerful because humans coordinate through them.
Money, blockchains, even equity markets only function because everyone else also accepts the ledger.
Real assets (farmland, rental apartments, power plants) and many equities yield ongoing cash flows or direct consumption services. Even if narratives wobble, a tenant still pays rent and a generator still feeds the grid. That stream of benefits gives the asset a fundamental floor independent of price history or social belief.
Prime land in central Rome has held value for two millennia despite regime change.
The value persists because people like to think that it has value. There is historical association with gold as a currency; this has created a cultural attachment to it that persists even though that association is no longer extant.
~Nothing has any inherent monetaryvalue.~ Financial cost is, at its core, is a convenient collective delusion.
WHAT IS IMPORTANT is the underlying trading and exchange of good that we use in our daily lives. -- food, transport, housing. More transactions then people are doing better. Less then unemployment. how and what you pay with (or agree to pay) is just a matter of convenience and cultural norms. Goats, land, gold, and then later currencies.
Look at economy and then money as just a convenient way to pay for something that you consume.
Currency is just a convenient way of counting. remember that value is a reflection of the real economy: land, food, goods and services. go bsck to barter economies where we traded goats, wheat, salted food/meat .. and evolved into gold and currency (before central banks)
Stay with basics if real economies ... today value of currencies are just people/banks/ traders evaluation of long term prospects of economic growth of US, China, Japan, UK, EU...
The driver is real economy -- goods and services, trade -- of currency which is just a way of counting
Gold is mostly cultural and anthropological -- look to countries and monetary economics MV=PY.
For some people and countries gold still holds some value (cultural) and hold over from gold backing currencies.
speculation and long term cultural values of exchange.
Gold/silver markets there is no underlying economic value -- except gold in teeth or silverware / jewelry which is more vanity related.
Gold and silver are not the issue anymore. A 19th century approach to banking. We are off gold (silver) standards, so now value of economy and currency, like $, Euro, Yen, Rmb.
Currencies are a while different/complex area where value reflects how countries are doing (balance of payments) and relative we size.
The Gold Series: Uses and Demand (Part 3)
In the past two parts of this infographic series, we saw its rich history and also how mining and supply works. Here we look at how gold is used across the globe. Generally speaking, half of all gold demand is comprised of jewelry sales. About 10% of gold is used in technology, where it is […]
www.visualcapitalist.com
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